Tuesday, November 30, 2010

The Real Reason Why You Don't Take Out Loans For College

Keble College Chapel as viewed across the quad...Image via Wikipedia
Watching my four children on their college adventure has given me time to pause and reflect how proud I am of them. My wife and I have preached and preached how important a college education and the following job is to a successful life. Thankfully they have listened.

Throughout the college journey it has been hard to avoid loans. We have a prepaid college plan for all of them. There have been Pell Grants and scholarships. There has been out of pocket expenses, but nothing that couldn't be cash flowed. We were lucky. But we were prepared and able to have the income to pay for it and avoid loans, for their sake.

Some families don't have the resources or access to scholarships. They don't know about the FASFA application and sources of college money. What they do is take out college loans. Here's where the problems begin. Here is something I believe most people don't even think of.

There is a new study that says that only 22 percent of students enrolled in bachelor's programs at for profit colleges and universities graduate within 6 years, this according to The Education Trust, a Washington, D. C. based group. That compares with 55 percent for public universities and 65 percent for private nonprofit schools.

It is very possible that you will not finish your college plans. Taking out student loans and not finishing is a mistake that will follow you for many years. In the students life many circumstances can come up that will delay the completion of college. There are financial, health, relational and physical problems that could cause the student to never finish. With those outstanding loans your finances will suffer for years to come.

Taking out loans is considered the only way to go to college to most people. But with escalating tuition costs and a new awareness in the culture to be more frugal; students and their parents are finding new ways to better prepare.

If you don't have enough money to pay for college you have two options. Either reduce costs or increase cash. You will have to decide. It will be hard but paying off student loans is much harder.

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